Prime Minister

Mark Carney

‘s speech at Davos laid out a Canadian grand strategy rooted in strategic autonomy through collaboration with other middle powers. To achieve this vision, Canada needs an economic security act that would bolster supply chain resilience and create high-priority technological capabilities. Such an act must be integrated with similar efforts by our European and Asian partners to become an indispensable ally.

As Carney explained, we live in an era of great power rivalry in which strong states can exploit economic interdependence. In order to increase Canada’s freedom to manoeuvre, it must bolster its economic and security capabilities. Countries earn the right to take principled stands by reducing the leverage that other states can wield over them.

But Canada’s industrial strategy lacks the focus and collaborative structures necessary to deliver on this vision. The country’s commitment to its manufacturing and

critical minerals

industrial strategies has been listless at best. And its current plan for national

defence

is focused on defending the

Arctic

with over-the-horizon radar, submarines and fighter aircraft. Canadians could be forgiven for concluding that big-ticket procurement and subsidies for foreign companies won’t make them safer.

In a world where the lines between economy and security are increasingly blurred, the vision for national security must be much broader. It must encompass dual-use materials and technologies that both position Canada in globally competitive industries and secure its sovereignty.

Canada must act decisively and rigorously. In doing so, it can learn from

Japan

‘s example. In 2022, Japan passed the Economic and Security Promotion Act, which now represents the world’s most comprehensive and strategically sophisticated national economic security framework. The plan was supported by just US$7.8 billion, but it is rapidly transforming Japan’s industrial landscape.

The act has four pillars. First, it aims to secure the supply chains for 12 technology platforms, including semiconductors, batteries, aircraft parts and permanent magnets, with the goal being to reduce dependence on any single country by building domestic production capacity and establishing stockpiles.

Second, it identifies and plans to defend Japan’s critical infrastructure to ensure the continuous provision of essential services (electricity, gas, water and communications) by working with prescreened companies.

Third, it targets the development of technological capabilities in 25 high-priority military and dual-use areas. These areas identify highly specific functions that Japan’s companies must master, such as autonomous drone control, stealth technology, electromagnetic launching capabilities and communication jamming technology.

The precise nature of these targeted areas is critical because it enables nimble and decisive action by the government and companies.

The fourth pillar ensures that the intellectual property created in these efforts is kept at home.

An essential element of Japan’s strategy is the creation of public-private councils so that the government and companies can collaborate on research and development. These councils are now being complemented by a broader public-private national security council to set direction for the supply chain mission. This feature capitalizes on the specialized information and operational expertise of the private sector without abdicating national security to the whims of the market.

Japan’s approach is exactly what Canada needs: a targeted, collaborative approach to building essential capabilities.

The objective of Canada’s efforts in these alliances should be to make it an indispensable ally: an essential partner in building the collective capacity to exert middle-power agency. Making Canada an essential player will give it a seat at the table, as Carney said.

Therefore, Canada must integrate its economic security act with Japan’s, as well as with similar efforts in Europe, the United Kingdom, Australia and South Korea. This core group, the G6+, must deeply collaborate on the construction of innovation ecosystems and value chains to support economic security.

Canada’s defence and dual-use technology ecosystem is rapidly improving. This year, 22 Canadian companies won awards from the North Atlantic Treaty Organization’s innovation accelerator program, up from seven last year.

The winners include Volta Space Technologies Inc., which is working on wireless optical power beams to enable persistent drone flight in extreme cold, and Reaction Dynamics Lab Inc., which is developing responsive space-launch capabilities.

However, these wins beg the question of whether Canada will finally be able to address the longstanding problems plaguing its innovation ecosystem and critical minerals industry. Canada still needs better tools to scale homegrown technology leaders and to systematically address price uncertainty in the critical minerals sector.

The ecosystem of agencies — from the Major Projects Office to Build Canada Homes to the Defence Investment Agency — that the Carney government is now creating enhances Canada’s capacity to act strategically. But a Canadian Economic Security Act would provide the targeted focus and the public-private collaborative structures necessary to turn these fragmented efforts into a coherent grand strategy.

By learning from Japan and integrating our frameworks with the G6+ middle powers, Canada can finally move from being a resource-rich bystander to a capable, necessary ally.

  • John Manley: Why Canada needs to play it cool on CUSMA — and keep its options open
  • David Rosenberg: Memo to Mark Carney: Don’t bring a butter knife to an economic gun fight

Bentley Allan is vice-president, future economy, at the Transition Accelerator and an associate professor of political science at Johns Hopkins University.